EU ‘tax haven’ blacklist raises questions about Europe’s support for Tunisia

Tunisian analysts and commentators said putting Tunisia on the “tax haven” blacklist goes against previous EU pledges and statements.
Sunday 17/12/2017
French President Emmanuel Macron (C) greets Tunisian President Beji Caid Essebsi as he arrives at the Elysee Palace in Paris, on December 11

Tunis - Leading Tunisian politi­cians and business officials are lobbying to have Tuni­sia removed from the Eu­ropean Union “tax haven” blacklist that alleges that 17 coun­tries fail to meet EU tax guidelines.

The blacklist announcement shocked many in Tunisia, which has counted on the European Union for support as it faces economic and social hardships during its demo­cratic transition.

Three basic criteria were said to have been used to compile the blacklist: tax transparency, fair tax competition and the implementa­tion of the Base erosion and profit shifting (BEPS) framework — stand­ards devised by the Organisation for Economic Cooperation and Development (OECD) to curb tax avoidance.

Other countries listed include the United Arab Emirates and Bahrain in the Middle East. There were a se­ries of small island countries on the blacklist but also South Korea and Mongolia.

The EU announcement is unlike­ly to have an immediate effect on the Tunisian economy but it puts the government on the defensive while trying to renew foreign inves­tors’ interest in the country.

Tunisian analysts and commen­tators said the move went against previous EU pledges and state­ments.

“Putting the country on the (EU) tax-haven blacklist is an enormous slap. It is all the more hurtful that it came from a strategic partner,” said economist Houcine Ben Achour.

Tunisia, which has been hailed as the only democratic success of the “Arab spring,” is sensitive about its reputation abroad because its economy depends to a large extent on foreign investment and tour­ism. The country’s tourism sector suffered a major setback after ter­ror attacks in 2015 and phosphate exports have been slowed due to strikes and protests this year.

Tunisian analysts blamed author­ities for failing to take preventative measures ahead of the EU decision, which had been in the works for more than a year.

“The news that Tunisia is black­listed hit the business community like a lightning strike,” said econo­mist Marouen Achouri, “but two questions emerged in its wake: Why has Europe, which pretends to stand with Tunisia with its sup­port, taken such a decision? And how have Tunisians hit such a rock bottom?”

Achouri blamed government infighting for the inadequate re­sponse.

“No one can say they are really in charge of the government on ne­gotiations of international financial issues. There are several at various ministries dealing with such is­sues,” he said.

The European Union’s tax ha­ven investigation began in Septem­ber 2016 after leaked documents known as the Panama Papers de­tailed how wealthy individuals and businesses used offshore accounts to avoid taxes in havens such as the US Virgin Islands, the Bahamas and Panama.

The investigation’s results were hotly disputed by Tunisian offi­cials, who insist the country should not be included on the list.

“Considering Tunisia as be­ing a tax haven is unjust,” said Chawki Tabib, president of the Na­tional Anti-Corruption Authority (INLUCC). “Tunisia is not a paradise for those attempting to avoid taxes or launder money. Tunisia would have benefited economically and financially if it were a tax paradise. Some countries that are indeed tax havens are not on the blacklist.”

He said Tunisian institutions had not done “enough to defend the country’s business interests.”

Top government officials said they hoped Tunisia would soon be removed from the blacklist.

Tunisian President Beji Caid Essebsi urged France to support Tu­nisia’s removal from the list during a meeting December 11 with French President Emmanuel Macron in Paris.

“We do not fathom the aim be­hind such decision,” Caid Essebsi said during a news conference with Macron. “Tunisia does not merit being put on this list. We deem that this decision hurts the image of Tu­nisia at a time when we are working to establish a state of the 21st cen­tury.

“Because of the notion of criteria or because of a tardy reply, we are mixed in with bad company. We will do our utmost to make the poli­cymakers rescind their decision on Tunisia,” Caid Essebsi added.

Tunisian Prime Minister Youssef Chahed spoke with European Com­mission President Jean-Claude Juncker to plead Tunisia’s case. To shore up Tunisia’s lobbying efforts, Parliament Speaker Mohamed En­naceur formed a joint parliamen­tary committee to connect with the European Parliament to back Tuni­sia.

Tunisia has offered tax incentives for offshore businesses since the late 1970s when the country adopt­ed a development strategy aimed at increasing exports. The offshore regime is regulated by the country’s Investment Incentives Code.

Export-related economic ac­tivities employ about 400,000 Tunisians.